The facts at hand do not support this. According to
this article (and I've seen similar figures reported elsewhere), physical game sales made up $1.5B of the total $60B gaming market in the US last year. If we remove the roughly $5B in console/accessories sales from the $60B total, then comparing software-to-software, physical copies represent about 3% of the market. Of that 3%, we can assume a significant portion are sold through online storefronts, though I couldn't find exact figures on that. So you're looking at maybe 2% overall where people are going in-person to stores to buy physical games. Not "incredibly significant" by any measure.
I don't like the fact that physical game media is dying, but it's a fact nonetheless.